* S&P 500, Nasdaq hover at records as sharp market

rebound continues

* Nvidia ( NVDA ) results out Wednesday, as semiconductor shares

soar

* Walmart ( WMT ) reports Thursday; Target ( TGT ), Home Depot ( HD ), TJX among

other retailers due

By Lewis Krauskopf

NEW YORK, May 15 (Reuters) - Two themes critical to the

U.S. stock market -- the artificial intelligence boom and

inflation-pressured consumer spending -- will come under the

microscope next week with earnings reports from semiconductor

giant Nvidia ( NVDA ) and a host of retailers led by Walmart ( WMT )

.

Stock indexes continued their charge higher this week, with

the benchmark S&P 500 and technology-heavy Nasdaq

Composite pushing to record levels. Two factors

influencing market action in "almost parallel tracks" have been

developments with AI and the spike in energy prices caused by

the war in Iran, said Allen Bond, portfolio manager at Jensen

Investment Management.

"There is not a lot of overlap in the two narratives, but

one day to the next, the developments ... can really drive the

market," Bond said.

Since its low for the year in late March, the S&P 500 has

stormed back about 18% and is now up more than 9% in 2026.

After the sharp rally, several investors said the market was

poised for a breather. Some worried that relatively few stocks

have led the recent gains, suggesting the rally may be less

robust than it seems. For example, only about one-fifth of S&P

500 components have outperformed the index since the March 30

low as of Thursday morning, according to LSEG data.

"There are really a smaller set of names driving the overall

index returns again," said Patrick Ryan, chief investment

strategist at Madison Investments. "It's not necessarily a

healthy market when you have that many stocks being left

behind."

NVIDIA EARNINGS ON TAP AS SEMIS SURGE

Nvidia ( NVDA ) reports results on Wednesday, as an exceptionally

strong first-quarter for U.S. corporate profit growth winds

down.

Shares of Nvidia ( NVDA ), the world's largest company by market

capitalization, and other semiconductor stocks have propelled

indexes higher in recent weeks. Nvidia ( NVDA ) shares are up more than

40% since the March low, while the Philadelphia SE semiconductor

index is up about 70%, amid voracious demand for chips as

tech companies spend massively to build data centers and other

AI-related infrastructure.

Nvidia's ( NVDA ) AI products have driven its shares up over 1,900%

since the latest bull market began in October 2022.

"What we need to see from Nvidia ( NVDA ) is evidence that justifies

the increase in the stock price and justifies their position and

their benefit from this increased spending in data centers,"

Bond said. "The results will be looked at ... as a signal into

the health of the rest of the industry."

One topic is whether rivals are eroding Nvidia's ( NVDA ) market

share, said Yung-Yu Ma, chief investment strategist at PNC

Financial Services Group.

"It's probably going to be more a story of, is Nvidia ( NVDA ) able

to defend its leadership position as well as it has been able to

the past few years?" Ma said.

INVESTORS SEEK RETAILER VIEWS ON SPENDING TRENDS

The coming week also offers an update on the retail

industry. Walmart ( WMT ), the world's largest retailer, posts quarterly

results on Thursday. Other retailers reporting next week include

Home Depot ( HD ), Target ( TGT ) and TJX Cos ( TJX ).

Investors have been wary that war-related inflation will

start to weigh on consumer spending, which accounts for more

than two-thirds of the U.S. economy.

Data this week showed high monthly readings for both

consumer and wholesale prices, with the Producer Price Index for

April posting its largest rise since March 2022. Earlier this

month, the U.S. national average gasoline price topped $4.50 a

gallon for the first time in nearly four years.

Investors will want to hear from retailers about spending

trends and whether they have changed in recent weeks, PNC's Ma

said.

"At some point, these costs are going to catch up with

consumers and are going to start to moderate spending," Ma said.

"That is probably what is more at stake for the retail earnings

is, how resilient is the consumer?"